Apple begins defense against possible ebook antitrust case

Posted Mar 9th 2012 12:45PM by Steven Sande
Filed under: Apple

Apple is wasting no time beginning to defend itself against the possibility of a U.S. Department of Justice (DOJ) antitrust action alleging that the company conspired with publishers to fix ebook prices.

Last week, Apple requested that a class action suit alleging price-fixing on ebooks be thrown out. Part of the suit hinges on a comment that Steve Jobs made to the Wall Street Journal's Walt Mossberg in January of 2010, saying that unhappy publishers might decide to withhold ebooks from Amazon.

Lawyers in the class action suit think that Jobs's comment meant that Apple and publishers were conspiring to force Amazon to raise ebook prices. Apple's retort last week says that the lawyers "mischaracterized" the exchange, and that Jobs only meant that Apple had a different strategy in the ebook business than Amazon.

Apple says that it wants to sell as many ebooks as possible, which is totally believable since the company is still a relative bit player in the ebook market. As a result, the company would not have an incentive to raise prices on ebooks. But Apple's argument fails to address accusations that Jobs schemed with publishers to slow Amazon's eventual move into the tablet market with the Kindle Fire.

Apple's lawyers responded in their court filing last week by downplaying the threat of the Kindle Fire:

But this allegation just strings together antitrust buzzwords.. Nor does this "Kindle theory" make sense on its own terms. For example, if Amazon was a "threat" that needed to be squelched by means of an illegal conspiracy, why would Apple offer Amazon's Kindle app on the iPad? Why would Apple conclude that conspiring to force Amazon to no longer lose money on eBooks would cripple Amazon's competitive fortunes? And why would Apple perceive the need for an illegal solution to the "Kindle threat" when it had an obvious and lawful one which it implemented – namely, introducing a multipurpose device (the iPad) whose marketing and sales success was not centered on eBook sales?

There are rumors that some publishers are currently in settlement talks with the DOJ. These publishers might be exchanging damning information for a lesser settlement, which could spell trouble for both Apple and other publishers.

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